China: Due for a Reality Check

Pro: Too Much, Too Fast

China has its exports to thank for its economic juggernaut. This year’s pet-food disaster—in which companies recalled 5,300 products, largely because of tainted ingredients from the mainland, and thousands of dogs and cats were killed—underscores the giant weakness behind the success story. As more safety concerns crop up, who knows how many of the Middle Kingdom’s trading partners will cancel manufacturing contracts?

And if quality issues don’t threaten China’s outsourcing business, the ambitions of other emerging economies will. Russia, South America, the Philippines, and Africa aren’t blind. Their governments see China’s success, and will pursue their share of the economic miracle that outsourcing bestows.

Let’s not forget, either, the havoc China’s development has wreaked within the country itself. Waste disposal and pollution will grow into bigger and bigger problems, as the landscape sprouts more factories and industrial complexes.

Some Beijing officials, as well as those at local levels—the country has 41,636 townships—have a stronger interest in winning business than they do in preserving the environment. A significant number are undoubtedly in bed with the factories seeking building permits and other privileges.

Yes, the Chinese government is good about assuring its foreign trading partners of its ecologically sound policies, but enforcement ranges from tricky to impossible. Communist officials in localities have great power. A mayor who likes the idea of a new tool-and-die factory can make it happen with relatively few checks and balances.

And no Chinese official at any level seems capable of stopping the intellectual-property theft. Even in the heart of Beijing, peddlers are selling pirated Microsoft Office software and fake Callaway golf clubs. These problems do not endear the country to its foreign trading partners.

In short, just because China can mobilize Big Business fast, it doesn’t mean it can regulate its industries to make them safe, green, quality-driven, and chock-full of integrity. Any of these problems could blow up, and give the economic miracle a dose of hard, cold reality.

Con: Hard Work Always Brings Profit

Chinese bureaucracy works differently from that of the superpower known as the United States of America. For example, plans to rebuild on the World Trade Center site, an effort close to the heart of virtually every U.S. citizen, remain stalled six years after the September 11 tragedy.

In Beijing, on the other hand, once a decision is made to, say, build a new industrial complex, it can be up and running, along with new apartment buildings and roads, within a few years. The country’s economy has averaged 9.5% annual growth for three decades.

That growth derives from a highly diverse mix of products. China is no one-trick pony. The country produces clothing, TVs, home furnishings, nanotech optics—you name it. In the unlikely event its industries take a seriously damaging hit, Beijing could easily purchase business interests in other countries. China has $1.2 trillion in foreign reserves, and a healthy trade surplus.

True, corruption, pollution, and poor working conditions for its people form something of a dark cloud over the economic miracle. But let’s face reality: The U.S. has contended with the same problems for decades now, without their causing any full-blown economic disaster. (The Great Depression of the 1930s resulted not from any of the above causes, but rather from overproduction and excessive speculation.)

And China is working diligently to fight corruption and pollution anyway. The fact that the country charged 33,000 government officials with misuse of power demonstrates its commitment to fairness and honesty. Although the recent government execution of Zheng Xiaoyu—the food and drug commissioner accused of accepting bribes in return for approving unsafe medication—isn’t something to applaud, it does show Beijing’s willingness to act swiftly when its products’ safety is compromised.

China is not broken. It’s experiencing the growing pains of any booming economy, and its future in international business looks burgeoning and bright.

Opinions and conclusions expressed in the BusinessWeek Debate Room do not necessarily reflect the views of BusinessWeek, BusinessWeek.com, or The McGraw-Hill Companies.

Reader Comments

Nick

July 13, 2007 1:49 PM

The new international hazardous warning label: Made in China.

A lot of people like to compare apples to oranges by pointing out that being made in Japan or Korea used to equate to shoddy goods, so China is just like they were. Wrong. The Japanese and Koreans used to make shoddy goods, because they were on a learning curve. The mainland Chinese do not make shoddy goods. They deliberately substitute cheaper toxic materials into consumables and deliberately skip manufacturing steps that they're well aware of to save a few bucks.

As to the argument that the U.S. used to deal with the same corruption problem in the past with no current problems, that, too, is comparing apples to oranges. With a free press in the U.S. and a two-party system, any malfeasance was quickly pointed out by some opposition party. With a China one-party rule, the only pointing out that happens is when it affects a citizen in the U.S. And any executions of China party members only happens to out-of-favor party members. Note that the brickworks slavery scandal did not result in any executions--did not affect any U.S. citizen and the officials in charge were not out of favor.

But any anthropologist would have told you to expect this a long time ago. Any system that suppresses religion (no matter how fraudulent the religion) has an unintended side effect of suppressing ethical behavior. Why should one be ethical when there's no afterlife or ghosts to fear? Take it all now and to Hades with anyone else.

Bob

July 13, 2007 3:33 PM

China is not where Japan and Korea are, because China overall does not make shoddy goods. Japan and Korea made shoddy goods, and few people bought them. Then they started making high quality goods, and the trade deficit widened. China is at that trade-deficit area now. The goods are so much in demand that the deficit today is unprecedented in the history of global trade. The shoddy goods charge is just hope that somehow it would entice consumers to lower consumption of Chinese goods and prevent a widening in the traded deficit. Without the will to place tarrifs and to take decision-making options away from the consumer, this is the best competitors can do. Perhaps if this fails, they may consider more protectionist options.

Andy

July 13, 2007 4:22 PM

It was not too long ago that the world rejected beef from the U.S. because of mad cow disease. Last year, a contaminated veggie caused several people to die in the U.S. What does it tell us? Accidents do happen, intentionally or not.

Sol

July 13, 2007 6:58 PM

As Andy stated: "Accidents do happen." Give China a break. So they accidentally put poisonous plastic in wheat gluten? It can happen to anybody. So they were just found to have accidentally replaced the pork in the pork buns with cardboard and industrial coagulants? So what? It happens once in a while. As to that tire-stripping thingy: Anyone can accidentally misplace a step or two in the manufacturing process whereby multiple strips of safety material are forgotten. And all those drugs that were made with industrial solvents--hey, so they mixed up a chemical or two? Besides, they didn't even sell that outside of China...yet. "Accidents do happen, intentionally or not." Andy's a great intellectual.

bob

July 13, 2007 9:27 PM

Just because it's reported in the media more doesn't mean it actually occurs more. More imports are turned away from other countries than China due to substandard quality.

China's aggregate amount is only larger because it also exports more, but its rate is smaller than others.

Melamine for years was used in animal feed for U.S. cattle, sheep, shrimp, and seafood. Suddenly a Chinese producer was found to be using the stuff, and it becomes a government outrage. http://vetmedicine.about.com/b/a/257197

Paulson has been sent to China repeatedly now to negotiate an appreciation in the RMB, hoping that somehow it would stall the U.S. trade deficit amongst some other things. Maybe there are also some geopolitical elements involved. The RMB has appreciated somewhat, but the Chinese surplus still grows. The Chinese economy has only sped up to a record 11% while exports continue to rise despite the recent media scares.

j

July 14, 2007 12:34 AM

Regardless of what the above mentioned, China's power is coming on strong and here to stay.

As so with Great Britain, the glory days of the USA will eventually fade away. The next superpower is China.

Denshichiro

July 14, 2007 3:23 AM

I haven't yet finished the article, but skipped ahead to the commentary. A few folks seem to think the author doesn't have all his facts right. While I'm not yet in a position to debate that point, my question is this: The article is posted as being up July 23, 2007. As I write this, it's only July 14, 2007. If the writer, editor, and publisher can't get a date right, what else have they gotten wrong?

Newton

July 14, 2007 4:01 AM

These cases of poor product quality of Chinese goods are similar to cases of E. Coli poisoning in America; that is, the publicized cases represent a minuscule fraction of actual cases.

And to comment on the con argument, I suggest the author read Marc Reisner's classic Cadillac Desert. The Great Depression was caused partially by bad environmental policies; i.e., people trying to farm areas that could not sustain farming over long time periods.

xu xiaoye

July 14, 2007 7:43 AM

A recent government-sponsored survey revealed that China's unreported and unregulated "grey income" amounted to U.S. $600 billion, or 24% of the official GDP. There were comments that the survey might have understated the magnitude of grey income.

In simple terms, the above may be extrapolated to indicate that 24% of the population, or about 300 million, persons in China engage in economic activities that are unregulated or defying attempts at regulation.

Until the majority of China's population gets off the poverty line, enjoying middle-class living standards and demanding social civility, awareness, and responsibility, abuses for the sake of economic gain will continue--perhaps for a few more decades.

BetweenEars

July 14, 2007 1:50 PM

Even an idiot can see that the current blitz of publicity about Chinese-made products was politically motivated, all due to the uncontrollable trade deficit to China. Out of hundreds of billions of imported products from China, isn't it reasonable to say that, by statistics, Chinese products are 99.999999% in good quality?

OnNick

July 14, 2007 3:10 PM

Nick,
Everybody is entitled his or her opinion. However, "opinion" here refers to a belief out of sound or best as possible judgement from various sources of information. For your case, deliberately being slanderous is not "opinion." I read your post in various places. All appear to be with the same flavor or attitude of someone who came from Taiwan independent-move gangs (taidu fenzi).

July 14, 2007 4:02 PM

Faye

July 14, 2007 4:25 PM

Ha, ha, where did people get the "comparing oranges and apples" information? Japan or Korea used to produce shoddy goods, because some Japanese or Korean makers were on a learning curve and some were deliberately substituting cheaper and potentially harmful parts to save a few bucks, just like China is now.

America used to have corruption, and it was not that quickly pointed out. Goodness, how quickly is quickly?

Any anthropologist who tells people things like, "Any system that suppresses religion (no matter how fraudulent the religion) has an unintended side effect of suppressing ethical behavior." Must be a pretty unsuccessful one.

Phew.

tiddle

July 14, 2007 9:03 PM

While I sit on the fence watching the debate, I come away with a few observations:

(1) There is little doubt that the quality of a large number of manufactured goods from China have tremendously improved quality since just 10 years ago. One thing that comes to mind is apparel.

(2) Having said that, I should point out there have always, always been rogue entrepreneurs in China who would do anything to make a few more pennies on the product. These are people who have little to no moral compass to stop them from doing evil.

(3) Unfortunately for China, due to the humongous number of products it produces, even just a small percentage translates into very big absolute numbers.

(4) Unfortunately for China, too, the corruption is rampant, and local (provincial and even central) officials are so incompetent that those rogue entrepreneurs are never caught or punished.

(5) And this is the hard part (for Chinese to swallow): The people have no say in the government that can go on trampling over all its denizens. After all, with 1.1 billion people under its charge, the government's [affecting] just a few hundred or thousands of people "shouldn't do much harm." After all, that would save the government money to provide health care and pensions to these people.

(6) I was in Hong Kong some 25 years ago when China was opening its doors. Even back then, when more and more products were trickling out to the Hong Kong market, there were absolute horror stories (industrial waste like asbestos found in blankets and jackets, which were later called "black cotton"). So, no, these recent horror stories that reach the U.S. market do not surprise me at all. After all, it has always been like that.

(7) The sad thing about China is that 25 years later I'm still hearing these stories. That tells me its system simply hasn't changed. So, for those of you folks who propose to give China a break, be prepared to have that break go on forever, because if you don't push it from the outside, China will never change. Ever.

alan

July 15, 2007 2:31 AM

I agree with tiddle. Give China a break? That is not the point of the issue. Who needs to have a break? Maybe the Chinese people, but never the government.

Nick

July 15, 2007 10:19 AM

To "OnNick": So which part of what I posted was lies? Everything is verifiable--just do a simple news search for all the reputable news sources. You sound like a stereotypical Communist propaganda officer: If you got caught in lies, call the person who shines the light of truth on you. Hope everyone is stupid enough to just take your word for it. Unfortunately for those who like to lie, the Internet is now a great place for anyone to easily search for the truth.

Sivaram Velauthapillai

July 15, 2007 11:20 AM

Off-topic.
Nick, come on, are you implying that ethical behavior is dependent on religion? Last time I checked, religion had killed more people in the pursuit to instill a moral code than many of the largest wars in history. Didn't Europe only start to ascend after the start of the fall of Christianity (i.e. Enlightenment)? Ethical behavior is not dependent on having "no afterlife or ghosts to fear." People who fear the afterlife are more prone to do more crazy things (just look at some of the warmongering Islamic fundamentalists).

bob

July 15, 2007 11:43 AM

I think the discussion has gotten off the point. These commercial practices are not that different from the US norm. The US has been trading with China for more than 20 years. And suddenly its become a safety concern? If anything the quality should have improved over these last 20 yrs rather than fall.

The only difference today is that China has accumulated 1.3 trillion dollars in reserves now and made another record surplus larger than any in the history of world trade.

At this rate it can soon become 300 billion annually, another 1.2 trillion in a short period of 4 years. Thats a lot of global currency reserves.

xingtiao

July 15, 2007 11:54 AM

To understand the magnitude of this problem and the length of time it is likely to take to solve it, one just has to live in China for a year or two and see the corruption in every school and small shop. When parents buy their children's success and a market-stall owner emulates the rich by flicking adjustments to her scales when weighing, it's clear that the next generation will learn the same attitudes. Two years in China certainly convinced me that anyone buying anything from a mainland Chinese business must be careful. No, that's not a racist comment, I love this country and pity her people who have to live with the burden of checking every restaurant bill and scrutinizing the way vendors weigh the goods they want to buy. If it happens inside China, it will be tried on foreign customers.

Anthropologists are not noted for supporting religious practices and if one does that, I think the anti-religious kick reflex must be suppressed. I noticed that the most upright people I met in China all turned out to be Buddhist, Taoist, or even Christian, so I agree with the sentiment.

If you are involved in accepting Chinese students into further study or employment, give them an on-the-spot check to see if their daddies and mummies bought their "piece of paper" or if they actually worked for it. The richer their families are, the less likely they had to do any work at university.

Chinese are no worse than Western politicians, but who trusts those guys?

tiddle

July 15, 2007 12:05 PM

To "bob":

The story of China's surplus and huge reserve is a matter of cause and effect. If you continue to buy products directly or indirectly produced in China, then you're subsidizing and encouraging that.

But more to the point is that we're talking about product safety, not about how much they're selling.

To put it another way, if food and products coming from China are safe and of good quality and cheap, too, you would still have the big surplus/reserve argument, but safety would become a non-issue, and I wouldn't even be posting here.

If your focus is on the surplus/reserve, then you should perhaps considering posting to another forum that focuses on competitiveness, rather than product safety.

bob

July 15, 2007 2:01 PM

China has product-safety issues. But so does every country. China's exports are no more dangerous than exports from countries around the globe.

Stopping exports due to substandard quality is a norm, but highly publicizing it now is a bit politically motivated.

Bruce

July 15, 2007 2:50 PM

My company has done business with China for years. I make regular trips to the manufacturers in China and check the products personally as well as making them perform tests in front of me. They do not object, and we do not have any problems.

If I were buying painted trains sets, I would have them give me the composition in scientific report form, and I would take random samples when the product arrived and send it to a local lab for analysis.

If I were buying electrical products, I would be burning them for at least 240 continuous hours before I started shipping, as well as checking for hot cables, overloads, chances of burning, etc.

If anybody thinks corruption is isolated to China, and it appears too many do, I would say just one word to you all: Enron. Corruption is endemic worldwide--we have as much of a problem with cities spending tax money wooing American companies to set up in their neck of the woods. Why did BusinessWeek in the same China issue report the Google come hither, or does that not count?

If firms did due diligence when specifying the products they wanted made, made regular trips to China to check and recheck products, and did random sampling--instead of rubbing their hands together in glee and figuring how much more profit they are making, I guess BusinessWeek would have a bunch of blank pages to fill.

Of course, China is far from perfect, but then, let's see, we have had much longer to perfect our system than it has, and we are the ones who owe them $1.25 trillion (U.S. dollars).

I could go on and on, but the answers will be the same for each and every product: Do due diligence!

bob

July 15, 2007 3:16 PM

According to the FDA, "the Dominican Republic was stopped 817 times last year, usually for containing traces of illegal pesticides. Candy from Denmark was impounded 520 times. By comparison, Chinese seafood was stopped at the border 391 times during the last year."

I'm sure China is responsible for badly produced food, but so is everyone. Japan and South Korea still ban the sale of U.S. beef. U.S. irradiated food is still not allowed to enter Europe.

The sudden concern now, even though it's not even that big a concern, is most likely due to a U.S. China trade spat over Chinese exports and the Chinese trade surplus. The U.S. has complained to the WTO, stating China unfairly subsidizes its exports, complained to the IMF that China undervalues its currency, and made claims about the lack of product safety.

Another example is Chinese garlic. California growers are feeling the pinch from Chinese competitors and are now lobbying the U.S. government to control Chinese exports. In the past they passed tariffs on Chinese garlic, a temporary ban based on dumping allegations. Now they are using the theme of product safety and have even sponsored a chef to say California garlic just tastes better.

Bruce

July 15, 2007 4:33 PM

On Tiddle:

We once had a cat called Tiddles, and it sat on fences, too.

I guess from your comments that the last time you were in Hong Kong, a leased part of China to Britain then, was pre-Tiananmen Square and long before China got underway with its second industrial revolution.

In answer to your points, so what is different in Points 1 and 2 as far as the USA is concerned--or for that matter, most manufacturing companies in the world to a greater or lesser degree?

Point 3, I regret I cannot get into due to the advanced mathematics you use. Very big numbers.

Point 4, your comments apply to every manufacturing company in the world to a greater or lesser degree.

Point 5, you need to get on a plane and go to Beijing and look around you and see what has been done in housing, roads, and cleanup, (almost all factories gone from the city). Bicycles are being replaced by cars with roads big enough to house them. Conditions in restaurants are better than I have seen in many states in the U.S. and generally happy people living there. Health care is pretty good and quick and very inexpensive. The average Chinese person retires in his or her early fifties. Many stay retired; a lot do something they enjoy rather than what they have had to do.

Point 6, maybe that's true; I don't know. I was in Hong Kong in 1976, and it wasn't true then. Six years later, you say it was. How long were you in Hong Kong, two days or a week? So, based on 25-year-old hearsay, since I am sure you did not wear a black cotton asbestos jacket, you translate that into no surprise that there are problems today? What, so they made bad jackets then, so their cars are no good now? TVs, DVD players, and a plethora of goods that we buy more and more of every year since you were there.

Point 7, you could not be more wrong. China is self-motivated to make itself the biggest and the best--25 years is a blink of an eye in terms of what they are doing. Soon they will sell more cars than the Japanese, more electrical goods, more clothing, more everything, and you, like me and the rest of the U.S., will be in line to buy it, because it will make our standard of living cheaper and give us more money to spend on more things. China doesn't need a break. It's getting there mostly on its own and with the $1.25 trillion U.S. and the $300+ million U.S. it will make every year from us from now on, plus euros, yen, dinars, and pounds, which probably means it has a surplus of $3 trillion U.S. or more now.

I live in the USA out of choice, but I don't go around with my eyes closed, and I find it useful to find out the truth for myself before I go spouting off. Sorry Tiddle, get off the fence before you fall off.

nanheyangrouchaun

July 15, 2007 4:53 PM

Besides the country's poisoning itself to death, tens of millions of China's poorest, least educated, and least cultured men will never find a mate. Ask any guy how dangerous of a situation that is.

Nick

July 15, 2007 5:57 PM

To Sivaram: Ethical behavior is not tied to religion. It's tied to cultural behavior of which religion is a part. Cultural behavior develops as a means of maintaining the status quo--the status being the survival of a particular culture. And the threat of religion is merely one method of enforcing behavior conformity within a culture. Any culture that lacks a culturally defined rule of behavior comes into trouble as each individual member looks to himself first vs. the community first. And the first thing a misguided utopian Communist society does is suppress cultural identity, which leads to a lack of mandated behavior patterns raised in a person. Even the bomb-loving Muslims have a cultural behavior that enforces ethics. They may kill, but they won't do anything against their ethical code. This is basic anthropology. Look it up, and learn something.

As to the other apologists here: Yes, there are other incidences of corruption and pesticide in products. But note that even the pesticides from other Third World countries were an unintentional by-product of insect control, not a deliberate substitution of consumables with toxic materials. This is the difference between ignorance and deliberate fraud with depraved indifference. But if you insist on giving China a "fair shake," by all means, buy the food from there and eat it. And make sure you use only tires made in China. Because the Chinese sure aren't stupid enough to. They all rush to buy imported food and medicine. The best stores in China advertise "guaranteed imports."

As to the Enron scandal, yes, it was found out readily. And prosecuted. You heard of any prosecutions in China lately? Except that one scapegoat ex-head of food and drugs that was killed? Notice the current head of food and drugs is still approving toxic substitutes?

But there is one recurring theme for the China supporters here: Point to other people's wrongdoings. Ignore the fact that other people's wrongs were found out and prosecuted vs. lack of prosecution in China. And make sure one compares as many apples to the one orange as possible to confuse the issue. And if that doesn't work, cat-call anyone who disagrees with you as a slanderous liar. And of course, really, really hope that the readers are too lazy to look up the truths on the Internet.

bob

July 15, 2007 7:40 PM

Has the head of the FDA in the U.S. ever been executed? Because in China, civil officials have lost more than just their jobs during scandals.

Sodium lauryle sulphate and similar industrial toxins and cancer-causing agents are used in U.S. soap, toothpaste, and shampoo every day. The chemical is an ingredient for garage floor cleaners and agent orange.

tiddle

July 15, 2007 8:04 PM

To "bob":
If you have that much confidence in the produce from China, I would suggest you spend some time in China, living off of the local food and water for a month, and you would have better appreciation of what it's like.

As to the number of times shipment is stopped, based on the country of origin, I would also like to see the actual incidence of enforcement (over total number of shipments imported to this country) in terms of how the sampling decision is based, how much produce a country is exporting to the U.S., how much of that is better sampled and tested, what lab test results are like, and the severity of the harmful substance(s) found. Solely basing on a number of shipments being stopped is like looking at a galaxy system from the bottom of a well.

tiddle

July 15, 2007 8:08 PM

To "Bruce": I've been living in Hong Kong for more than 30 years, so let's compare notes, if you wish.

blueowen

July 15, 2007 9:30 PM

Being Chinese, I'm very worried about our country's future. We did create an economic miracle, but a miracle cannot justify the suffering of ordinary Chinese, brickwork slavery, undrinkable water, etc. All should be unforgivable.

bob

July 15, 2007 10:04 PM

It's annual sampling, like a poll. In any case, the information is better than allegories or misleading media reports.

As for consuming Chinese food and water directly, not that it matters, but yes, will do. Plan to be there this October and again in 2008.

tiddle

July 15, 2007 11:09 PM

And please, bob, no bottled water. No purifier. Eat like a local. Drink like a local. Not in some 5-star hotel in the middle of Beijing.

As for me, I am an inherent skeptic, so I don't take media reports as they are. All these years, I've traveled to China and East Asia regularly, so you may say I'm one of the early adopters in the region.

Do go there, and take a firsthand look at the have's and have-not's.

As to the arguments of Enron, etc. in the West, yes, certain corruption is not a thing peculiar just to China. What is peculiar is the fact that, in the U.S., when you have an issue with the administration, with the government, you can vote them out, but in China, you have no choice. Zippo.

So, enlighten me, how do you deal with a situation like that, when your government deals with you like you don't count?

Admittedly, I am not a pusher for regime change like Bush & Co. But the system is inherently flawed, and you as a citizen have no say in effecting any improvement to it, except to hope and pray that some enlightened godsend leader might descend on the people. That's basically what happens in China. And that's why I have very little faith that the system will change if there is no change agent from the outside.

The Chinese have a long line of history (and you may say, burden) with them. Bringing about changes to the system is not something you would see on the agenda. Even the republicans in Britain have problems getting rid of the royals.

tiddle

July 15, 2007 11:32 PM

And for "Bruce": Good for you that you use vigorous tests on the products from your Chinese supplier--and in front of you, no less. I do hope that you have your own managers and quality control (QC) in place locally. Doing it in front of you is one thing, and what happens on a day-to-day basis can be quite another.

And I do wish to know: Of all the companies sourcing from China, how many could realistically afford the money and time to do that? They do so with the sole purpose of minimizing costs. Many, in particularly smaller companies, could not afford to do so, even if they would love to. This is not the ideal situation obviously, but it's what's happening in reality.

At least in the U.S., if a consumer gets sick or dies, he or she [or his or her family] can sue. In China, it's "good luck to you." There's a Chinese saying synonymous to "Such is life," as in, life dealt you a bad hand, and you just have suck it up. (After all, average joes have nowhere to turn.)

It's absolutely true to state that China has achieved its manufacturing prowess in a matter of a few decades, when Western countries took a few centuries to perfect the system. The question is, do you (as a consumer) want to be the guinea pig to QC the products and produce? I don't.

bob

July 15, 2007 11:32 PM

China's corruption index is better than that of many democracies in Asia, even at 1.3 billion people. Corruption in Hong Kong and Singapore is lower than the United States'. They have not only lower corruption levels than neighboring democracies in Asia but also some of the lowest in the world. Hong Kong's administration is chosen by Beijing; Singapore is governed by the Lee clan.

I don't do bottled water, and I don't do 5-star hotels in the United States. So don't worry about that.

Khengsiong

July 16, 2007 2:47 AM

Many of you have mentioned the flaws in China's "system." It is not just the system. Culture plays a part, too. In Chinese society, the nation is above people, and individuals' rights are not respected. If the country can achieve a high growth rate, it doesn't matter if the health of a few thousand citizens is jeopardized.

Chairman Mao once said he didn't fear nuclear war. There were 400 million Chinese. If 200 million perished, there were still 200 million left. Today the Middle Kingdom has a population of 1.3 billion.

Unfortunately, no outsiders can change China (as suggested by tiddle). Only Chinese can change their country.

JimG

July 16, 2007 5:19 AM

At the risk of being labeled a racist, I'd like to point out that Anglo-Saxon law is based on the notion that "my word is my bond." This is not true in many parts of the world, where lying is an accepted and perhaps necessary part of business. "My word is my bond" certainly doesn't appear to be true in China, which admittedly is in an early stage of its economic development. Yet China isn't alone in the problems it's facing with faulty merchandise and toxic food and drugs. After all, in the early 20th century, it took Upton Sinclair's The Jungle to raise awareness of abusive working conditions and dangerous food in the U.S. meat-packing industry. Historians credit the book with sparking the passage of pure food and drug laws in the U.S. No doubt there's an Upton Sinclair or two walking around China today. Unfortunately, because China isn't a democracy, the modern-day, Chinese version of The Jungle will be suppressed by the government. I'm sure the Chinese experts out there can point out the pure food and drug laws that already exist in China, but recent events demonstrate they don't have any "teeth." And with the stakes so high, there's little reason for Chinese manufacturers to play by the rules, despite an execution here and there. As Americans outsource production to China, we're losing control over quality, despite all of Hank Paulson's jawboning. It's also worth noting that Japan's emphasis on quality owes a lot to the efforts W. Edwards Deming, the American statistician who preached the continuous improvement gospel in Japan in the 1950s. As a result of the U.S. victory over Japan in World War II, American experts were able to help shape the country's economic rebirth and enforce such Western ideals as the sanctity of contract. That was back in the day when American production was the envy of the world and American-based multinationals hadn't gotten hooked up with cheap labor. We don't have the same influence in China that we did in Japan, which leads me to another great maxim of business: Let the buyer beware.

Tom Cooper

July 16, 2007 11:42 AM

What the article misses is that, given the reality of Chinese corruption, the U.S. government has no choice but to impose stricter inspections of Chinese goods, especially food goods. At the same time, we have to insist and be able to verify that Chinese processes and standards are as rigorous as they are for any American company.

tiddle

July 16, 2007 12:17 PM

I perfectly agree with Khengsiong regarding the comment about a culture that was inherited from the past 5,000 years.

By outside change agent, I did not mean someone from outside can push for regime change or systemic change in China. The shame (or pride) factor plays a large part in effecting change in China.

If this were not so, would we have seen such swift action as the execution of the head of the SFDA for corruption?

And please, the relatively clean government in Hong Kong is not a result of the appointed officials from China since 1997. Don't kid yourself on that. If it had not been for the near riotous move in 1977 in Hong Kong by the police force and the resultant moratorium by the British Hong Kong government for the past wrong deeds, Hong Kong could have been the same as mainland China. So, the credit for the clean government in Hong Kong does not go to Beijing.

Human lives have never been very prized in ancient China (even now), where people are traditionally referred to as "ants."

But I'll close all my arguments now. We've digressed too much on Chinese culture already. And for those who don't know much or have no interest in it, all will be lost.

Nick

July 16, 2007 12:28 PM

I noticed that bob and others keep pointing to U.S. "problems" like http://vetmedicine.about.com/b/a/257197.htm?terms=melamine. But then they failed to mention that the U.S. government was the one who looked into this and issued a cease and decease order. I don't see the Chinese doing it. They point fingers and say nothing's wrong.

And bob, I somehow doubt that you've ever been outside of the U.S. (except maybe to Cancun), nor will you ever be in the near future. Your posts just doesn't jibe with experiences that a person who'd been to China would have had.

bob

July 16, 2007 12:52 PM

Yes, the above is racist.

As for quality, the market is successful in sorting these things out. That's why companies like the Yugo went out of business, and GM and Ford are at the edge of bankruptcy. And Zaibatsus like Toyota are expanding.

Considering the disinformation, a trade war seems to be brewing.

bob

July 16, 2007 12:57 PM

Never been to Cancun.

What happened was that U.S. companies had traditionally used melamine as an ingredient for pet food and livestock feed.

You made the argument that only China would do these things. Clearly that's not the case.

rainpromise

July 16, 2007 12:58 PM

China is developing.

nanheyangrouchuan

July 16, 2007 1:00 PM

Pro-China types like to point out Korea's and Japan's problems in reaching high quality (Korea still has a way to go in some areas).

The Japanese are slightly obsessive-compulsive perfectionists, and the Koreans have decided to use Japan as their measuring stick.

Chinese are more interested in quick profits for buying foreign luxury items and "big face."

tiddle

July 16, 2007 1:26 PM

I can't help myself, and I have to say this one last time:

For those GOP types who have such great faith in the free market and that everything will work itself out, let's just say this: China has had 5,000 years to work itself out, and it hasn't. Granted, China was not a free market, so I do wish to know what inspires your great faith that the free market will come in and work in the next 5,000 years (if you leave it alone to sort itself out).

As to those who would insist Western countries have committed those same wrong deeds in the past, consider this. Some 20 years ago the news broke in Hong Kong about "black cotton" products coming from China and making people sick. Twenty years later, we still hear the same story. Does this tell you something (anything) at all?

But don't get me wrong: A near totalitarian state does serve a purpose in China. Chinese culture nurtures unrivaled leaders (like Chairman Mao and emperors in the past) and a one-party system. It keeps the order. It fosters stability. This is the main difference between French Revolutionary times or even the downfall of the Soviet Union and the situation in China.

As for the U.S. government, it's wise to help keep the orderly state of 1.1 billion (however totalitarian it might be). With Iraq--a country of just a few million people--turning into such a hornet's nest, what would it be like to have a hornet's nest with a billion-plus people in such a state. So, it's better to utilize it as a sweatshop than to have a true democratic state in China.

Perhaps until China's products and produce start to make outsiders sick, the U.S. government won't do anything.

bob

July 16, 2007 1:31 PM

Japanese Zaibatsus were brought up, because someone made the silly comment about U.S. quality.

China isn't comparing itself to Japan. When the U.S. started a trade war with Japan back in the 1980s and 1990s, Japan's trade surplus with the U.S. was at tens of billions at best. China's current trade surplus is growing at a rate of $200 billion a year--$300 billion if June's figures keep up.

david ellis

July 16, 2007 2:58 PM

The reality check is not on China: It is on those who import and distribute the questionable goods. Less-developed or Third World countries used to produce products that were of bad, unsafe, and inferior quality. The quality-check personnel should do a better job. Today's flow of information helps to spread the bad news much faster and stop the flow of these products in the market. Companies or people involved will be exposed sooner than they expect. The market will learn, and things like this will not last long and will be corrected--just like the recall of defective cars in the auto industry. People may get hurt or even lose their lives because of these defective products, but it is almost impossible to prevent 100% of things like this from happening. Let's improve our quality-control personnel and implement strict legal rules to control the process. Do not hope we can change the way China works; it will take a much longer time and not guarantee the desired results.

Dave Li

July 16, 2007 8:09 PM

I agree what is happening in China now isn't purely "learning." Japan/Korea both went through the learning phase. However, you must remember one thing, that Japan and Korea were highly influenced by the United States. The U.S. gave money and good advice for the most part, and the two countries learned. China isn't the same. No country wants to teach China, nor do the Chinese want to be taught in the same manner the Japanese and Koreans were.

Also keep in mind that Japan developed an industry before the war ended. Mitsubishi was making warplanes and tanks before it started making tractors and TVs.

China has a long history, and it is just beginning to recover.

Dave li

July 16, 2007 8:16 PM

The U.S. FDA has allowed all the "toxic" products into the U.S. We should blame--but look in the mirror as well. What are we doing right or wrong?

When Wal-Mart keeps asking for lower prices, how do you think the prices go down? The Chinese yuan has appreciated 10% or more to the dollar. Where do you think profits come from? We all want cheaper products.

China has kept U.S. inflation low and interest rates low. Who benefited? We did. Look at the value of your home. Who gained? We all did.

But the party is getting rocky.

Sean

July 16, 2007 10:07 PM

The root causes of the low cost of Chinese goods are: 1) Cheap energy cost and zero waste cost for MNCs in China, and this is also the reason so many US. and Japanese companies choose China as their production bases. 2) Most Chinese workers are working in a terrible environment, with low-wages, no safety assurance, and no opportunity to change this situation.

Richard Loy

July 17, 2007 2:33 AM

The Chinese people are perhaps the most tolerant ones around, but the government must not take things for granted, because the people are not stupid. Laws in China are not made to be above everyone because the party is still at the very top. This is the key difference, as the judicial branch cannot overrule the executive branch of the government. Until that happens, laws are there for the people but not for those who rule. Don't ever think that the common people do not know or understand the differences, but their voices are not yet loud enough to be heard. A government that does not think it has to be accountable to the people for its actions and policies is living dangerously close to extinction. But China is moving in the right direction, perhaps not quickly enough for some. There is no perfect political system, but I hope we get one that accommodates, makes self-adjustments through time, and advances with mankind.

John

July 17, 2007 3:26 AM

To Nick: Your assessment of the morality issue being related to religion couldn't be more accurate. I'm a little nervous about writing this while in China (all of these sinophiles should know why without explanation), but I felt very compelled to write something because I completely agree with you. China's government is Communist, but if you've ever walked the streets of Beijing, Shanghai, Guangzhou, etc., you would know that it's not. It can be better described as socialist with Chinese characteristics. One of these characteristics is that Chinese citizens are forbidden to believe in religion--not forbidden to practice it privately (I know it's a fine line). I only mention that to stress that China is in the process of slowly growing into something very different; essentially, religion is nonexistent. As I'm sure many of you know, that's because everyone is supposed to believe in the government. Chinese people are left with one thing to believe in: money. Money is money; where it came from and through what means it was gained are simply unimportant factors. Whatever it is that discourages Americans from conducting unethical business doesn’t exist in China. It isn’t hard to see that religion plays a huge role. And yes, when you wake up on a Saturday morning in China with a splitting headache, it is because you've been drinking fake Jack Daniels.

Tiddle: It's ignorant to claim China has had 5,000 years to work itself out. Considering the context of this topic, China was born in 1911 upon the defeat of the Qing Dynasty.

Jimmy

July 17, 2007 5:49 AM

To Nick: You wrote: "Even the bomb-loving Muslims have a cultural behavior that enforces ethics. They may kill, but they won't do anything against their ethical code. This is basic anthropology. Look it up, and learn something."

What ethics do suicide bombers have, those who are prepared to kill and maim innocents seemingly without any conscience? That you are prepared to stoop so low to be an apologist for such people reveals much about you.

bob

July 17, 2007 10:11 AM

Not GOP. Voted for Nader. There were Communist riots in Hong Kong in 1967 and Britain responded by cracking down on Communist organizations, but Hong Kong has never been democratic. Hong Kong's corruption index is lower than both the UK's or the U.S.'s, then and now.

The market will work itself out. Like I said, its no different than Japanese vs. GM and Ford.

"From July 2006 through June of this year, agency inspectors stopped 2,723 shipments of all such items from China, followed closely by India, 2,620; Mexico, 1,876; and the Dominican Republic, 887.

But China sends more products into the United States than any of those countries, at least in terms of the dollar value. In 2006, for instance, China shipped $288 billion in merchandise to the United States, compared with $198 billion from Mexico; $22 billion from India; and $5.3 billion from the Dominican Republic, records show.

Salmonella was the top reason that food was rejected from India, and it was found in products like black pepper, coriander powder and shrimp. "Filthy" was the primary reason food was stopped from Mexico, and the rejections included lollipops, crabmeat and dried chili".

All in all, China's exports arent too shabby, although the current media scare would have you believe that everything coming out of China is tainted.

This media stunt is a political tit for tat that China too can play.

Jay

July 17, 2007 11:53 AM

Nick, I completely agree with you on the excuses being made by the China apologists. "Everybody does it, so it's OK" is not a valid excuse.

An all-powerful government's placating its critcs by executing an official who has made mistakes does not prove anything. Making changes so that those mistakes don't happen again is the true sign of a mature society. That's the difference between the US.. and China.

tiddle

July 17, 2007 1:39 PM

To "John": The year 1911 marks the beginning of the end of one dynasty, but it does not mark the beginning of its history. That is a very marked difference.

If we switch the context of the discussions to religion (or lack thereof), it brings about some good but many bad things. One good thing is that women did have almost equal footing as men, as evident in women being called "half of the sky." (And look at how women were treated in rural India.) But one of the worst things that happens is the tearing down of morality.

We have to note that this has more to do with morality and the moral principles than religion. For the large part in Chinese ancient history, moral principles (not the worship of any one God) are cherished. This was all changed and torn down after the Cultural Revolution.

If we are to say something is missing in China, it is not the religion per se, but the morality that's sorely lacking. And money is the amoral object that fills the void. After all, wasn't it what Deng had championed to people, that "it's a good cat as long as it can catch mice; it doesn't matter whether the cat is black or white?"

If the state sanctions it (and greed is good), everything and anything goes. That's the sad part of it.

bob

July 17, 2007 2:17 PM

China, like every country, will continue to improve its standards and quality.

But it's pretty evident that China is being singled out--while Americans die from U.S.-grown scallions and spinach, and goods all over the world are equally suspect. You sit here and only focus on China. This is more of a trade war than anything.

John

July 17, 2007 3:03 PM

Tibble: You did a great job of masking a lacking point with irrelevant quotations and failure to address the core of the topic. To be a little more direct, why is it that morality is "sorely lacking" in China?

I can tell you that it has a lot to do with the lack of some influence that is not metaphysical. Religion.

(On a different topic) since 1776, America has been rapidly growing toward what it has become today. Anyone who is knowledgeable about Chinese history will conclusively admit that any period before (and including) the Qing Dynasty had no positive effect on the modern Chinese economy. With a drastic government change in 1911, China should be considered new. Newer than the U.S., with a great deal of time to grow in comparison.

tiddle

July 17, 2007 3:06 PM

To "bob": Let's be fair, there was almost the same amount of media coverage when spinach within the U.S. was tainted. There had been almost constant and regular coverage of it on where it's being traced. Did those farms in California jump up and down and complain they were being singled out? No. Because if you have a problem, you deal with it, and you get it fixed so that it won't happen again. That's the kind of attitude we all want China (or any other supplier, local or overseas) to take. That's the kind of attitude that makes you stronger next time.

Naturally, nobody wants his or her own mistake to be highlighted. But to say that China is being "singled out" for this, that's a bit melodramatic.

The way that China is right now, as some of the postings here rightly pointed out, it would placate with a few high-profile arrests or executions, and the system goes on the same merry way. I don't see things being addressed. That's the Chinese way of dealing with things.

To be sure, the U.S. and other countries have the exact same issue, too. Look at Enron and the subsequent SarbOx issues that tried to deal with some of the root cause, and how now a lot of people try to roll it back. What I want to see, as a consumer, as a citizen, as an investor, is transparency in the system--any system in any country--to ultimately achieve that nirvana. We should not cut corners to try to give this or that simply because "others do that, too" or "it's too costly" or "it's too hard" or "it takes time."

I do not accept that from U.S. companies, and I would not accept that from Chinese or any other companies either. That's where I stand, and that's why I sit on the fence. So, cut the crap that China is the poor guy, or China is the rich guy, because that's irrelevant.

cris perte

July 17, 2007 4:55 PM

OK. It is more than clear now that a more-than-green technology is needed to curb China's and the world's pollution.

The world needs to take notice of RW Bussard's claim that his non-polluting, nonradioactive byproduct nuclear-fusion process has great promise of a greener earth. The fuel for his reactor is boron (from salt-water), hence energy prices would be so cheap and so stable--and we have so much friggin' salt water on this earth--that you would never see a price increase in energy.

bob

July 17, 2007 5:00 PM

The Qing dynasty introduced agrarian reforms that led to a population boom--from 100 million to 400 million people. It boosted the national GDP and nation's welfare. For 300 years, they stood their ground. But like any government since Athens and Rome, it will be replaced with new governments because of the incompetence hundreds of years after.

But the above is all besides the point. The issue is pretty plain. It was basically about some Chinese goods being tainted. But then you turn it into an anthropology study, which is ridiculous. And the article insinuates that the economy is moving way too fast. So is 0.6 percent GDP growth the reason for tainted produce and corruption scandals in the U.S.?

I don't remember anyone describing Californians as despicable, as Chinese are being described here. It was simply a concern regarding a particular firm or industry, certainly not the entire state or the entire country.

Standards and qualities will be improved. But it's clear that this media blitz is aimed at a trade war between Washington and Beijing.

Rich

July 17, 2007 11:32 PM

Race, anthropology, religion all aside, I have been living and working in China for almost six years and the last four have been spent in the export trade sector. The fundamental problem is that, if you do not send in your own QC team to fully monitor any goods in production, there is a great likelihood that some area of production will be substandard. It is simply inefficient practice to think that the manufacturers here will be willing to guarantee QC will be taken care of. Okay, there are occasional diamonds in the rough, but my point is that even providing your own quality checking in factories will not ensure quality product. Too many times we discover the most absurd issues at the last moment (and thereby potentially ruin production timelines and the usefulness of the product to the client).

Despite the constant smiles and assurances of a "long-term relationship" being the aim, factories here still are motivated by whatever profit can be gained today. In all levels of society (bar the private home), there seems to be a tragic lack of fundamental trust in other people in China. I am not saying other countries are parables of virtue, just that what undermines China, and filters down to the manufacturing of ultimately shoddy products, is that human trust is largely missing here.
Despite the constant smiles and assurances of "long term relationship" being the aim...factories here still are motivated by whatever profit can be gained today. In all levels of society (bar the private home) there seems to be a tragic lack of fundamental trust in other people in China. I am not saying other countries are parables of virtue, just that what undermines China, and filters down to the manufacturing of ultimately shoddy products, is that human trust is largely missing here.

pete

July 18, 2007 12:33 AM

As pointed out earlier, it is a blatant ploy by the government/media for negative coverage of China. It's amazing how much negative media coverage is directed at China on a daily basis. When I saw a positive story today--coverage of strides being made in AIDS in China--I was just shocked. There are always going to be unscrupulous businessmen all over the world peddling dangerous products, but due to the fact that China supplies the majority of all things sold here, it is amplified. It will be difficult to crack down due to the billions of manufactured goods leaving China.

chris

July 18, 2007 3:35 PM

I would argue that government censorship in China is still a danger to its own population and its environmental and social future.

Media and news in China are sometimes referred to as "happy news." It is intended to insulate the country from negative information. China has educated citizens, but the overall population still remains poor and undereducated. Hence, the common knowledge Americans and other nations take for granted is not readily available to help create awareness beyond what the local government reveals. Only those few Chinese who have global access to information are capable of drawing enough of their own conclusions to act and properly shape their own country. Tiananmen Square is one example of how the world outside China knew more about an incident than those living inside China.

People need to have a social and ecological awareness in order to develop a social conscience. In China, this is being hindered by media censorship. This is what is broken in China.

Ralph

July 18, 2007 7:37 PM

China the Dysfunctional Country:

That's a joke obviously coming from a liberal. I went to China
and was so impressed that immediately upon returning home, I bought Fidelity China fund and have watched it grow 28.9%. You (BusinessWeek) talk about how they have invested more in pensions, health care, and education. What a joke.

At least every Chinese person I've met can make change at the grocery store when our average student can't read a map, do math, or balance a check book. The Chinese have better health than Americans, who live on garbage bought at McDonald's, and their children are raised to respect and take care of their parents vs. relying on a government program called Social Security.

Do they have problems? Hell, yes. They need to work on cleaning up a lot of the pollution that "we" cause by building factories there so the average American can buy better, cheaper goods. I'll take their problems vs. the uncorrectable political mess our politicians have created buying votes here in the U.S. I have to laugh at all the comments about how they must develop a social conscience and how "it's not fair" to the people that some of the garbage news we watch is censored. Get a life.

MG

Rayc

July 18, 2007 10:00 PM

I think China made shopping good. The world will see more "Made in China" soon. I sustain China.

Mike Hockhertz

July 19, 2007 7:26 PM

LOL about the comment about Anglo-Saxons "My word is my bond." You will have to excuse me for not finishing reading your post, but the tears in my eyes made reading a bit difficult.

nanheyangrouchuan

July 20, 2007 5:27 PM

Ralph:
Apparently you have never lived in China. Their kids are more addicted to McD's than ours, and on any given day at any given time, you can find Internet bars packed with kids of all ages spending all of their families' money on online gaming.

jake

July 20, 2007 8:54 PM

Oh brother,

Bruce, you stole my thunder a bit. I recently talked to a guy who wanted to work for me. He used to work for a gaming software company. I asked him, where are their offices in China. He said they don't have any for fear of piracy. Ha. Guess what? Can't prosecute theft unless you're on the ground where that theft occurs.

I've lived in China for 21 years. I now have a company with about 100 Chinese staff members. Don't know any of them that are particularly religious, but except for one girl I prosecuted in the Chinese courts for theft of commercial secrets (she went to jail for two years), my people are indeed ethical and reliable and good. You see, you can use the courts here.

Bruce mentioned Enron. What about Cadbury Schweppes (duh, this year)? Ever heard of the shenanigans of "Jeff Gannon" i.e., James Dale Guckert, or Ted Haggard, the "moral" lighthouse of American evangelism? Some examples of great ethical "Christian" behavior, huh?

Whoever imports China products is responsible for abiding by the market regulations of the country in which they sell the product--not vice versa. That means, as one comment put it, "due diligence."

My company reads about 700 newspapers and about 400 Web sites on a daily basis. There has never been a more spirited exchange of information and criticism of the government like there is now. The country has only had 15 years of rapid growth (it really started in 1992, not before). It's straining under a totally new set of circumstances and doing a pretty good job. It will have its Enrons, for sure, but...

Inside China, there are two problems with quality that must be tackled. One is ensuring that export quality is high (it is, after all, in its interest to do so). This requires better management at the ports of exit. The second is more worrisome and harder to deal with. For example, every year millions of chickens and similar numbers of pigs die en route to the market. They disappear into an underground market. Eventually, this, too, shall become an issue here, and eventually it will be tackled by the Chinese press. But, in 15 years, regulations do not occur over night (legislative branch), and it takes even longer for the executive branch and judicial system to enforce. On top of it, even in the U.S., farmers are not unknown to sell tainted pork, as the following quote summarizes:

"[July 4, 2007] A judge found a Carroll [MD] farmer guilty Tuesday of animal mutilation and selling tainted meat from a farm littered with livestock carcasses and a slaughterhouse caked with blood." [http://www.mda.state.md.us/article.php?i=6423]

I drink Beijing tap water. I shop for produce (and who knows, en route-dead chickens) at local markets. I also buy imported liverwurst and duh, Cadbury Chocolates. I'd sure hate to catch salmonella from an imported chocolate.

The endless emotive reporting about China (you always hear "Communist China today" but never "capitalist America today"--why is that?) is just wrong and reflects the same sort of brinksmanship that Bush has brought the world to today. Drop the attitude, and do some real research on China. Then tell the story straight. And get over here and meet some Chinese.

The debate hasn't even started about the quality control of foreign products and the unethical behavior of the same in China.

RICO

July 21, 2007 7:28 AM

Money makes the world go around. Does it really matter what we think?

Scot

July 21, 2007 11:00 AM

We are still living in a country where the Hudson River and Great Lakes are pollution's nicknames. So let's turn over the discussion to our sons and daughters, who may be more qualified to debate. By that time, what do you think China will have become? No one wants to live in a polluted land, period. It's a developmental choice and transition. Don't play God here and behave as though you know better than all the world.

Lloyd Evans

July 21, 2007 12:36 PM

So here we have (Communist mainland) China, holding a seat in the Security Council of the U.N. as they point 1,000 missiles at a free and democratic Taiwan? Give me a break. This nation of 1.2 billion is ruled by a Communist party of 66 million; that’s 5% of the overall mainland China population. These 5 “percenters” will be thrown out on by a citizenry sick and tired of the corruption at every level. This nonelected “government,” run by party thugs who seized power with blood and death in 1949, has no place in a free world market economy, much less a seat in the U.N. We have, in this China thug regime, steel-fisted rulers who punish the 1.2 billion Chinese citizens, not for what they think and say, but for what the party thinks they might be capable of thinking, let alone speaking. And you know what? The free and democratic nations of the world have become toothless in their condemnation. This grab-all-you-can-at-any-cost attitude is at the cost of freedom. Remember Communist China as the gang that gave America Korea and Vietnam, and strife in the Taiwan Straits. Today, the free world is complicit is waging war against its own freedoms by bellying up to these scum. And how do we go beyond trade in rewarding them? We give them the 2008 Olympic games to showcase their bravado and allow them to remain in the U.N.’s Security Council.

tiddlethehongki

July 23, 2007 4:16 PM

Ten years ago, Hong Ki looked down upon/discriminated against people from China.

Today, Hong Ki had to go back to mainland China for jobs, and Hong Ki worships China's customers.

bruce

July 24, 2007 9:03 AM

May I just remind a few people writing here, that America is a republic, not a democracy. A few people refine a few people and we end up with two choices, take one and leave one. So we have one choice more than the Chinese have to rule them. The Chinese have arrested 33,000 of their own government people for sins against the country. When I made the example of Enron, I did not do so to illustrate prosecution, but how much money (unrecovered) that was involved. Did all the donations to political causes get returned? I never heard.

To Tiddles, "All companies sourcing from China cannot afford not to spend the time and money checking it out" They have to, either directly or through an western consultant knowledgable about these things. If you ask a Chinese company to paint a train green and do not say "NO LEAD PAINT", if they have leaded green paint available they will use it. Whose fault would that be?
And Tiddles, the thing about you not being able to help yourself and having to say this one last time...Lets see, Zheng He discovered America in 1421, and Australia and Africa around the same time, and they used Chinese fireworks to celebrate it :). Give up about the asbestos black products, we only hear this story 20 years later because you keep telling it. I had a pair of American shoes once with cardboard soles. Unforunately I lived in a state where it rained.
Wal-Mart have their own buying offices in America, heard of any recalls from them?
Tiddles you just don't get it or want to admit it, skimming of business is generally illegal, except between countries, and we have been skimming from China for a long time, now we owe them so much, our government wants them to reduce the dollars value against the yuan. All well and good, but when it reaches 20%, (not long from now), how many more people will cross into the poverty area. I know Tiddles, it's the black cottons products fault.

hellohello

July 25, 2007 9:32 AM

To Bruce, Jake, and all who love rooting China:

1. Yes, it is true that China is so good and doing so well that it's going to make the U.S. kneel before it and cry mercy.

The same single-minded determination that allows the Communist party to build infrastructure so fast wants to stomp all over the U.S. and beat its chest like King Kong. (Do some reading on Chinese espionage and military buildup). So, honestly, the big picture in the long run is not about QC. It's the U.S. vs. China.

2.To both Chinese and U.S. governments, people die; it's a fact of life. The Iraq war vs. poor safety, and what have you. Corruption is also there, so this point is moot. So that means fundamentally, the U.S. is no different from China. As you guys put it.

So, in the end, that means asking yourself from which country you have the most to gain as an individual. Bruce, like you said, pick your side. And you already did by siding with China.

But wait, aren't you guys Americans? Why would you do something that would harm you and your countrymen in the long run? Has someone paid you to stand on their side?

Holly Garfield

July 25, 2007 6:07 PM

I find both sides right to some extent. China needs a reality check but seems to have that check done in the right places to start. The government has steady conferencing with the IMF and U.S. Treasury. The top leadership is well aware of the problems and is working as fast as it can to resolve them. Clearly, not everyone is on the same page, however. The middle management thrives on corruption, and Chinese investors are not yet experienced enough to evaluate stocks and markets properly. Pollution needs to take a back seat to expansion until worker-level pay increases outpace inflation. If the workers' pay is behind inflation, you have the makings of civil unrest of gigantic proportions. Reality checks will come to those who need them in time. Let's hope that will happen in a way that keeps China going, but that's no guarantee.

laowai

July 26, 2007 5:52 PM

To jake:

You drink the tap water?!

I have only spent a short time in major Chinese cities (Beijing, Shanghai, Guangzhou, Shenzhen), but when I lived in Zhejiang province, nobody drank the tap water.

"You can't drink that--it's unboiled water; you have to boil it first." People who can afford it can buy spring water for decent prices, a 19L bottle for 10 RMB in my local market.

Even in Taipei, nobody drinks the tap water straight. I have lived here for 12 months over the last 3 years, and have only once seen someone drink unboiled tap water--a politician doing it as a publicity stunt.

Assopinion

July 26, 2007 10:04 PM

To Laowai:
To drink the boiled water is our habit. I am in the U.S., and even I drink only boiled water.

bruce

July 27, 2007 3:58 PM

I don't get it. Whoever hides behind "hellohello" wants to misunderstand, so he can be seen as waving the Stars and Stripes. I am not siding with China or anybody else. I am pointing out you cannot blame China for building to the specs it is given (or not given) by American companies. If you, say, want a jacket made out of cloth, you cannot then say you wanted silk or worsted or cashmere, if you get something made out of cheap cotton and badly dyed.

Recently I saw a headline that another Chinese-made toy was recalled, and it was true. But a later headline left China out all together since this toy oven, which had no problems for years, had been redesigned and was built to spec, but one kid had to have his finger amputated. We need to hear both sides of the case, what original spec the Chinese were given and what they delivered.

Fact: I don't drink tap water anywhere; it stinks.

Hello, hellohello, you are just repeating the old story about buying Japanese, Indian, Korean, etc. goods and doing harm to the USA. Of course, you drive an American-made car, watch an American-made TV, play your American-made DVD player, wear an American-made watch, and fill up with American-drilled oil--tell me it ain't so!

Lloyd, I have no problem with any country that became independent. When did this happen to Formosa (Taiwan)? Chiang Kai-shek left the mainland in 1949 for a Chinese Island with his nationalist buddies. Not only is Taiwan still part of China but also the USA supports a one-China policy (officially). Who are you blaming, the USA or China?

Until you guys get the message that it is the country we live in that has to say OK, not the country that we buy from: If you don't like their products, however cheap, but you buy them to make more money for yourself, you are to blame, and calling foul after you pay cash for your new Beamer is way too late. Do due diligence, which is where I started from two weeks ago.

FREE TRADE'S A LIE

August 1, 2007 10:54 AM

Free trade is a complete fraud. This story shows why. Proponents of "free trade" say that free trade is good because it promotes efficiency. That is, if Mexico has a comparative advantage over the U.S. in producing mangoes, and the U.S. has a comparative advantage over Mexico in producing corn, Mexican farmers should stop growing corn and should grow more mangoes, and U.S. farmers should not grow too many mangoes, but should grow corn instead.

In other words, those countries that have comparative advantages in producing certain products should be producing those products that they are more efficient at producing. But this is not what is happening. China is manipulating its currency and is thus completely distorting comparative advantage.

If China didn't manipulate its currency, more computers would come from Mexico instead of China. More car parts would come from Indonesia instead of China. More textiles would come from Haiti instead of China, etc. In addition, U.S. products would be much less expensive for China to purchase. The simplest of demand curves will tell you that when the price of a product drops, the quantity demanded will increase (unless the demand curve is completely inelastic). Thus, if China didn't manipulate its currency, it would absolutely buy more U.S. goods, which would lower our deficit with China. Don't believe investment house frauds like Paulson or Roach, who say that a stronger yuan wouldn't affect our deficit with China. They are liars. Our deficit with China would absolutely go down. It's an economic fact.

Because of the currency manipulation practiced by China (Japan has also done it in the past), efficiencies are being distorted, and China is producing products that it isn't actually very good at producing. Again, it is going directly against what the alleged benefit of free trade actually is, which is increased efficiency. If we allow currency manipulation to continue, the world economic inefficiencies will continue to grow and will continue to be more pronounced. At an extreme, you could theoretically have Chinese farmers growing corn in the desert, while prime corn-growing land in the U.S. lies fallow.

So in conclusion, "free trade" advocates like Roach and Henry Paulson are frauds. They are just doing the bidding of their paymasters. Their Wall Street buddies are making a killing by the status quo. They don't care about economic efficiencies; they only care about how much they can make for themselves and their Wall Street and corporate friends.

Free trade is a complete fraud. Get an economics degree, and you will see how far the present-day reality has diverged from what free trade was really supposed to be about.

America, you are being had. Do some research, and you will see.

Matt

August 1, 2007 7:51 PM

I have been to China twice, traveled all the way from Beijing and Tibet to Inner Mongolia, and studied for three months in Suzhou, just outside of Shanghai. This being said, I agree with everything that BusinessWeek has to say. The story focuses on mainly the economic aspect, environment, and bureaucratic corruption, but China also faces many problems such as civil rights and social instability.

A front page article in The New York Times told how within the next 15 years, more than half of the population (more than 700 million people) will be retired. The economy in no way will be able to support this, especially with no government programs in place. In addition, comes another topic that is often neglected: China's one-child policy. In such a filial society, that one child will not be able to support his wife and both sets of parents, especially during a time when university graduation rates are at a record high and it is extremely difficult to find jobs.

Many people don't know that China has a constitution very similar to the United States'. However, that constitution is not even admissible in court. This also goes along with the fact that China has a 90%-plus conviction rate. If that doesn't show a lack of civil rights, I don't know what does.

There are several other examples, but those are just a few things I saw in China that would severely inhibit its journey on the road to success.

bruce

August 3, 2007 9:29 AM

"Free trade's a lie"

OK, why should China revalue its currency after the U.S. et al ran up debts when the currency was at 8.28 to the U.S. Now it is 7.57 to the U.S. So, effectively, the U.S. has had its debt reduced by 9% (so far), about $135 billion. If this revaluation changes by 20%, about $300 million savings on current debt, guess what the saving will be to the U.S. A big fat zero. Chinese goods will increase in value by more than 20%, of course, and more U.S. people will cross the poverty line, which the U.S. government will have to pay for. Inflation will rise, shortage of goods will ensue, China will easily find new markets, and the EEC will open its arms to China, so who will be the losers? It is really simple 101 Economics. Of course our deficit will go down, but who will go on selling its goods for less and less value when there are other markets willing to pay a higher price? If we let China spend its money on whatever it wants to, that would be different. But we still revert to the good old protectionism that says if we let China buy one oil company, it will buy them all.

Matt, go back to China for another three months (at least).

Riko

August 3, 2007 3:44 PM

Much as so with Gordon Chang's The Coming Collapse of China, there is nothing much here that has not been said a million times by skeptics and dragon slayers alike. Yes, China is big, corrupt, unwieldy, polluted, and run by heavy-handed technocrats. And it has been for all of its 30 years of reform. As with almost everything in the news about China, it is never as good as advertised or as bad as advertised. That is, China is neither on the cusp of taking over the world tomorrow nor collapsing under its own weight.

Ray

August 10, 2007 6:45 PM

China will stay, but Communist China will be gone, and very soon. A country that destroyed its own traditional culture of Confucius' teachings and killed 80 million of its own people for fear of losing its rulership is doomed from the start. The deliberate poisoning of foods and low-quality products is nothing but inevitable outcome. The harvesting of organs from living Falun Gong members for profit is a good example. What can you expect from such a regime? As the popular saying goes: In China, nothing is true but the date of a newspaper.

Flur

August 12, 2007 8:20 AM

The quality of all of our belongings--clothes, shoes, toys--has really changed over the years. Clothes and toys used to last decades; now they last a season. It's simply because cheaper labor means cheaper quality. This creates more trash and more waste. If we are not careful, we will be the first generation of Americans to not have antiques, because everything will turn into waste so that we'll buy more cheap crap. Enough is enough. No more "Made in China."

she_says

August 15, 2007 5:05 AM

Here's a great idea: Instead of buying from a country that forces loving mothers to abort wanted children and commits other human rights violations against nationals, let's make everything in Mexico. Perhaps its standard of living will skyrocket, and Americans can start crossing the borders to ask for jobs in Mexico. I will not buy Made in China. I have been in retail for years, and the quality is not anywhere near 90%. In fact, a Chinese businessman told me he had to end his import business from China, because product quality was so poor. Anyone who says otherwise is lying. Boycott.

she_says

August 15, 2007 6:11 AM

Bob,
If you must keep mentioning the ongoing use of melamine, you must also realize that your argument is not logical.

It is not the use of melamine that is in question. Melamine is simply a filler that looks like a protein in tests but has no real nutritional value, correct?

Animals died from poisonous chemicals that did not belong in the melamine. That is called "tainted" melamine. In that case, would you like to restate your argument that the U.S. government was complicit for allowing melamine to be used?

evie

August 15, 2007 2:27 PM

Even before the toy, tire, pet-food, etc. recalls, I have been disappointed in many products that I have purchased that were made in China--toasters, heaters, and small appliances that often give out before the manufacturer's warranty. I have even gone to the point of purchasing small appliances at Goodwill; they may be 10 or more years old, but they work without fail.

Another consideration is that in the 1950s and 1960s, appliances that failed were repaired. Now, repair is not an option when replacement is cheaper. How does this affect the landfills and environment? We are all contributing to global warming with our throwaway mentality.

A previous poster stated that it would be almost impossible to live without purchasing products "Made in China." I am angry enough to take up the challenge. At the very least it will make me think twice about purchasing discretionary goods. I could very well save a lot of money.

Ken

August 15, 2007 10:41 PM

You reap what you sow. How's all that outsourcing looking now? Why don't we just not make anything whatsoever in this country and have it all imported? It doesn't matter to the corporations if they make dangerous products as long as they make money. Sounds a lot like circa 1900 to me. I suppose we will be fighting unions with guns and baseball bats in the streets next. We need to give more corporate welfare and do away with the middle class and tax the life out of the poor. Does that sound like a true Carl Rove Republican or what?

Maine Coon owner

August 16, 2007 2:45 AM

I am starting to ask questions early and remove from my suppliers people who don't use good judgment. I have to deliver appropriately when I work. So do the suppliers.

Warren.Bock

August 27, 2007 4:58 AM

Doing business in China is not easy. The most important factor is patience. If you do not know what you are doing you can lose everything. Most US companies think getting a local is enough and do not do their homework. The local leads them by the nose where his "Guanxi " is served, milking the cow until it dies. German companies are the most sucessful.

Purchasing directly can mean more expense and be the most expensive in the long run. Using your China sales office to buy for you is the worst thing you can do. They do not know the production side and when they learn it they will use your sales network for themselves. Your home based or overseas procurement office might not have the technical expertise, product experience and objectivity to get the delivery and standards you need. They might not have the years of building "Guanxi" with suppliers to get the best price availaible nor the total buying power a third party has. Trading companies have higher volume of sales and good relations with manufacturers and can get lower prices, but they are after the deal and do not look after your interest. Sourcing companies identify, qualify and develop suppliers and save you money in the short and long term.
Warren.Bock@scandicsourcing.com

A Mom

September 5, 2007 1:07 PM

aSomeone on here said mistakes do happen and that consumers should give China a break. Sorry, but not where my child is concerned--I will not be giving China a break. Let's start becoming a nation that produces and not just consumes. My child means much more to me than the economic welfare of China (still a mostly hostile nation, by the way) or the fact that Mattel saves a few bucks.

Starthorne

September 5, 2007 1:24 PM

I have just 4 words for all of you:
1. STOP
2. BUYING
3. FROM
4. CHINA

I am not willing to wait another 20 years to see if China's ethics or skills improve on manufacturing and exporting safer foods, toys, etc. I am not willing to wait for them to change their tactics, and suddenly feel "terrible" about the hundreds of pets they caused to die horribly painful deaths. What about the fake blood proteins? What about the fake polio vaccines? Are you willing to risk your family's health? I won't.

Again, stop buying from China.

It's our only way to not allow them to slowly kill us.

To a Mom

September 8, 2007 8:42 PM

Let's look at two facts:

1) You may not buy, but millions of others will. This year, China's foreign reserves are going to pop up 11%, to $1.4 trillion (USD).

2) Why did you define China as a "mostly hostile nation"? Has China ever blown up the World Trade Center or bombed Pearl Harbor or installed missiles in Cuba?

May

September 10, 2007 1:29 AM

Tell me, why is China being hostile? What has China done to the Americans beside having a different way of running the government?

Wei

September 16, 2007 10:49 AM

It's just so difficult to "stop buying from China."

MarianoL

September 21, 2007 10:51 AM

Where is the news about Mattel saying that the problems with the toys were its fault and not China's? What's going on? When the first news came up, BW had a very big article on it; now it is not even treated at all. It just confirms the theory that it all was a U.S. campaign to hurt Chinese industry. Lame, really lame move.

Dawn Mohni

September 22, 2007 6:57 AM

Like many Americans, I am deeply concerned about the direction of the country. My concerns revolve not only around the conflict in Iraq but also our government's decision to support China in the production of American goods. Please correct me if I am wrong, but the People's Republic of China remains a Communist country whose government continues to suppress dissenting opinions and maintain political control over the legal system, resulting in an arbitrary and sometimes abusive judicial regime. My question then is, why do we continue to support this country through American dollars? In the last years China has risen to become a financial powerhouse, and I am gravely concerned that our dollars will play a pivotal role in future world conflicts, perhaps one even against us. I do not trust this country and have made a conscious decision to boycott all products made in China. As you can imagine, this is not an easy feat, but I remain vigilant in my cause and hope that our government will take a harder look at this issue.

I do not have an exact figure, but I can only imagine that billions if not trillions of dollars have been invested in building production plants throughout China. Thus, similar to the war in Iraq, there is no simple and quick solution. I do not believe we should pull out of Iraq right away, because I think such a decision would only have grave consequences. A gradual pullout is the solution, which could also be used in China. For example, many Americans are concerned and outraged about the influx of immigrants from Mexico. I see a simple solution to this problem. Immigrants come to the United States to make money, which they then send back to their families in Mexico. If they had good jobs and a surplus of jobs in their own country, I do not believe they would come in such vast numbers. In other words, I think we should move our production plants from China, south of the border. The Mexicans would be happy to do the work, and I am confident that they would do a good job, if not a better job than the Chinese. I am deeply concerned about this issue, and it is with great hope that we all see the absurdity in supporting a country that continues to this day to violate the human rights of the Chinese population.

blackmagic

October 3, 2007 9:33 AM

We can be very self-righteous when looking at other countries and their governments. Ours is the least corrupt, but it is only because our corruption is legalized. The PACs have led to payoffs and Congressmen who are focused on staying in power at the cost of advancing U.S. prosperity. Eventually, the Chinese will rightfully prosecute by not supporting our dollar.

sencitz

November 12, 2007 6:34 PM

It would appear that most of the above respondents have stock in Wal-Mart or some other large outsourcing corporation. The reason that only a small percentage of Chinese (and other countries') products are rejected is that very few of the imports are inspected. The latest estimate by the FDA is that only 1% of incoming food makes it to an inspector.

Toys and food are the headliners, but many other products aren't recalled. They are just junk and end up in the trash. Some of what I have experienced include: four toasters in two years. A portable air conditioner that never worked. A replacement came in a month with a large dent in the case, and it leaked. An outdoor light fixture lasted six months. Outdoor plastic that warped if the temperature approached 90 degrees Fahrenheit. A 60-watt incandescent light bulb exploded. A telephone that had such a loud background buzz you couldn't use it. And my favorite--a simple plastic pool float to hold chlorine tablets. It had the typical large thread screw top. Had to finally use a hammer to get the top off. Went back to the store, and the manager took one off the shelf and said, "Simple, just lift here and turn." He finally gave up trying. He admitted it was made in China.

I won't bore you with more junk, and yes, I've been to China, but that's another story. Never been to Wal-Mart and never will.

Question: Why have none of the China supporters, that I've looked at, explained the reason for the massive military buildup in China?

gb2000

November 16, 2007 7:01 PM

To Sencitz,
What does "the massive military buildup in China" have to do with the topic we have here? No one has ever asked about the massive military buildup in U.S.

To all,
I hate to debate on issues about China with anyone who has little or no knowledge of Chinese culture, tradition, history, or lifestyle, but with all the complaints and criticisms here, I couldn't help speaking out. Before anyone raises the question, I am a Chinese, born and raised in China.

To Dawn Mohni and those who feel insecure using products made in China, stop complaining. Just purchase things that are made somewhere else, and feel free to spend 20%-plus more on a product than what it is worth since you can afford it. On top of that, good luck finding a product that is not from China. Even if you find one that's made in Italy or the USA, trust me, parts of it are still made in China unless it's a food or beverage. America is supporting China? Puh-lease, that's one thing the Americans would never do. The only reason the U.S. wants to maintain the relationship with China is that it needs China to stay in power. That is why, with the skyrocketing oil price, the inflation rate still stays, and with the rising health care costs and the credit crunch going on nowadays, those Chinese goods would be the reasons for all of you to have a merry Christmas with stuffed stockings and Christmas trees for yet another year, so start appreciating that.

Regarding the tap water, who drinks tap water in any place? I know I don't even if I am in the U.S. or in Europe, unless I am on top of the Himalayas or the Alps.

Talking about the polluted air, please come to LA. I highly doubt that the air here is any cleaner.

To Nick, China does have religion; it is called Buddhism. "Any system that suppresses religion (no matter how fraudulent the religion) has an unintended side effect of suppressing ethical behavior. Why should one be ethical when there's no afterlife or ghosts to fear?" You have got be kidding me. Not that I agree with you on the correlation between "one's ethical behavior" and "one's belief in afterlife or ghosts," but just because the Chinese don't believe in the Western religions, it does not mean they don't follow "ethical codes" or don't believe in "afterlife or ghosts" or whatever nonsense you were talking about. Actually, if you have any knowledge of Buddhism, you'll know Buddhists worship many gods and do believe in afterlife and ghosts. Honestly, I feel so stupid just by starting this argument, because one's ethical behavior is so complex that merely relating it to beliefs is simply ignorant.

For your information, the suppression or crackdowns on foreign/local religions/beliefs from the government is their way of controlling superstition rather than religion/belief per se. (Not saying it's the correct way, but with 1.3 billion people, can you come up an efficient way?)

Now, about cheap labor, low wages, etc., those workers are mostly from rural areas, and trust me, they are way better off working in some industrial city than staying where they came from. They would either end up being a farmer, making no money at all, or marring to someone they've never met ,under family arrangements. Most factories provide them housing and three meals per day in addition to the wage. Last time I checked those workers had a way better life than that of the unemployed ones and homeless people here in the States.

bill

December 11, 2007 1:10 PM

You'd expect someone from China to defend China.

Phyllis Thesier

March 3, 2008 5:06 PM

And GB, when was the last time you lived there? We just returned--from 20 months there. The Chinese government needs to put a higher focus on their people's welfare and health before doing this silly space thing. Way too much illness and damn too little educational opportunity for the masses.

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